CANADA: O.K. to Buy U.S.

A sore point in Canadian-U.S. relations in
recent years has been the reluctance of U.S. firms to let Canadian
investors buy stock in their profitable Canadian subsidiaries. Largely
responsible for the aggravation was a kink in the tax agreements
between the two countries. A Canadian subsidiary that was 95%
U.S.-owned paid only a 5% tax on the dividends it remitted to the
parent company in the U.S. If the proportion of U.S. ownership dropped
below 95%, the dividend tax rose to 15%. Rather than have dividend
taxes tripled, U.S. companies shied away from selling stock to
Canadians.